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Valuing quality

Author

Listed:
  • Laura Blow

    (Institute for Fiscal Studies and University of Surrey)

  • Ian Crawford

    (Institute for Fiscal Studies and Nuffield College, Oxford)

Abstract

This paper uses revealed preference restrictions and nonparametric statistical methods to bound a quality-constant price series for a good that changes quality over time. Unlike the more usual hedonic regression techniques for estimating quality-adjusted prices, this method does not require us to observe the changing characteristics of the good or to assume a particular functional relationship between these characteristics and quality. To place a bound on quality change using revealed preference conditions we assume that preferences are stable over time, that quality change occurs in one good or group of goods and that the direction of quality change is known.

Suggested Citation

  • Laura Blow & Ian Crawford, 1999. "Valuing quality," IFS Working Papers W99/21, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:99/21
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    File URL: http://www.ifs.org.uk/wps/wp9921.pdf
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    References listed on IDEAS

    as
    1. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
    2. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-973, July.
    3. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-954, July.
    4. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    5. Muellbauer, John, 1975. "The cost of living and taste and quality change," Journal of Economic Theory, Elsevier, vol. 10(3), pages 269-283, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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